What is the context?
These verses summarize the saving action described in Ephesians 2:4–10. God, rich in mercy and love, has made people alive with Christ while they were dead in their trespasses.
Paul describes salvation by grace through faith as God’s gift. It is not from the recipients themselves or their works, so there is no basis for boasting about having achieved it.
The next verse describes the good works for which God created His people in Christ. Reading the whole paragraph keeps both truths in view: salvation is His gift, and the life He gives has a purpose in doing good.
How is this passage commonly understood?
Christians commonly understand salvation here as God’s gift through Christ and recognize that the new life is meant to bear good works. They differ in how they describe being made right with God and the relationship between faith, renewal and those works.
The Reformed Westminster Confession, chapter 11, describes justification as forgiveness and being counted righteous because of Christ’s obedience and work, received through faith alone. It also insists that this faith is living and acts through love.
The Catholic Catechism, paragraphs 1987–1993, describes justification as forgiveness together with inner renewal, given through Christ’s grace in baptism. It includes a response of faith and love enabled by grace, rather than treating human effort as an independent source of salvation.
The Methodist Articles of Religion, articles IX–X, teach that people are accounted righteous through faith because of Christ’s merit. Good works follow from living faith and please God, while being unable to remove sins. These accounts all appeal to God’s gift through Christ, while differing in how the gift and its effects are explained.
Where does this fit in God's plan?
Titus 3:3–8 gives a closely related account of the change from a former life of disobedience. God saves according to His mercy, through new birth and renewal by the Holy Spirit, poured out through Jesus Christ. Those justified by His grace become heirs with the hope of eternal life.
Titus then calls believers to devote themselves to good deeds. The connection places the gifts described in Ephesians within God’s purpose of renewing a people through His Son and Spirit, giving them a future hope and a present life of doing good.
What is our position?
Our studies The Gospel According to Jesus and Baptism read these verses as teaching salvation by God’s grace through faith, received as His gift rather than earned through religious effort or moral achievement. The Baptism study specifically distinguishes that saved relationship from the water baptism that follows: it understands salvation and the Spirit’s indwelling as received through faith, without waiting for baptism.